Dr Steve Garth, member of Stephan Independent Advisory’s Investment Committee, sat down with Joe Stephan on his It’s Never About Money podcast. This is Part 2 of a 2-episode seriees with Dr Garth. If you missed the first episode, listen now.
The dangers of DIY investing
There are some things that you just shouldn’t do yourself; home electricals, haircuts, medical diagnoses and investing. That is… unless you’re a professional.
This was a clear and recurring theme throughout our discussion with Dr Steve Garth of Principia Investment Consultants.
But why is that?
“When you’ve got a little bit of an ailment and you do a Google search about it, you’ll end up having cancer. According to Google. It’s nonsensical to try to sort of take the opinion of Google for your sickness. So when it comes to actual financial advice, go and seek the advice of a financial advisor.”, Steve explains.
That is, just because you can invest, it doesn’t mean that you should do it yourself.
That’s a trap that many business people fall into; there is a difference between being a good business person and being a good investor.
Steve believes successful investing is about sticking to what you’re good at.
“If you’re a successful business person and you’re starting to accumulate wealth, by all means, keep doing what you’re good at…. But…, for instance, if you don’t really understand the investment and it’s alternatives, then don’t do it.”
You may understand what a hedge fund is, or cryptocurrency, but if you’re not an investment manager, you won’t have an understanding of the vast array of strategies that can be utilised.
These strategies are void of emotion, based on all the facts on hand.
However, Steve says,if you are really interested in investing yourself, then the only way to do it yourself is in a limited way:
“I look at it as having a little bit of money and going off to the casino on a Saturday night, and you have a certain amount of money that you’re prepared to spend and have a nice time. And if something comes out of it, great….but it’s got to be what you’re prepared to lose.”
The risk of DIY investing is essentially that you’re diverting funds that could be used to achieve your financial objectives and goals.
This, he says, is particularly important to remember if you want to continue to build your wealth, and ensure that it is maintained to be able to pass down to the family and future generations.
“DIY investing doesn’t work… Stick to what you’re good at. See your financial adviser and enjoy the benefits of what capital markets return.”